SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended: March 31, 2003
OR
[_] TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO _______________
Commission File Number: 0-29459
PACEL CORP.
----------------------------------------
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1712558
---------------------------------- --------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
7900 Sudley Road, SUITE 601
MANASSAS, VIRGINIA 20109-3795
---------------------------------------- --------------------------------
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (703) 257-4759
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 day: Yes [X] No [_]
Transitional Small Business Disclosure Format (check one)
Yes [_] No [X]
State the number of Shares outstanding of each of the issuer's classes of common
equity, as of the latest date:
As of May 19, 2002, there were 304,804,510 shares of the Registrant's common
stock outstanding.
PACEL CORP. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION (unaudited)
Item 1. Index to Consolidated Condensed Financial Statements
Condensed Consolidated Balance Sheets F-2
Consolidated Condensed Statements of Income of Operations F-3
Consolidated Statements of Cash Flows F-4
Notes to Consolidated Condensed Financial Statements F-5
Item 2. Management's Discussion and Analysis
of Financial Results of Operations
Item 3. Controls and Procedures 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports 11
Item 7. Signatures 12
PACEL CORP. AND SUBSIDIARIES
Balance Sheet
March 31, December 31,
2003 2002
---------------- --------------
Unaudited Audited
ASSETS
Current assets:
Cash and cash equivalents $ 211,545 $ 8,379
Accounts receivable, net of allowance for doubtful accounts of $0
and $1,311 respectively - -
Inventory -
Deposit on Benecorp 96,000 96,000
Other receivables 46,164 16,499
Total current assets 353,709 120,878
---------------- --------------
Property and equipment, net of accumulated depreciation
of $129,388 and $73,946 respectively 23,713 24,961
---------------- --------------
Non-current assets:
Note receivable - -
Goodwill - -
Security deposits 3,991 3,991
---------------- --------------
Total non-current assets 3,991 3,991
Total assets $ 381,413 $ 149,830
================ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 1,299,519 $ 1,353,022
Accrued expense 259,381 234,602
Loans payable officers-Stockholders 1,006,839 956,309
Notes payable 873,750 873,750
Notes payable bank 35,437 45,565
---------------- --------------
Total current liabilities 3,474,926 3,463,248
Long Term liabilities:
Convertible debentures 287,618 409,111
---------------- --------------
Total long term liabilities 287,618 409,111
Total liabilities 3,762,544 3,872,359
---------------- --------------
Minority interest Commitments:
Stockholders' equity (deficit)
Preferred stock, no par value, no liquidation value, 5,000,000 shares
authorized, issued 1,000,000 shares 1997 class A convertible
preferred stock 11,320 11,320
Common stock - no par value, 200,000,000,000 and 650,000,000
shares authorized in 2003 and 2002, respectively. 119,791,243 and 21,184,591
shares outstanding in 2003 and 2002, respectively 11,365,769 10,685,520
Cumulative currency translation adjustment (18,720) (18,720)
Deficit (14,739,501) (14,400,649)
Total stockholders' equity (deficit) (3,381,132) (3,722,529)
Total liabilities and stockholders' equity $ 381,413 $ 149,830
================ ==============
See accompanying notes to consolidated financial statements.
F-2
Pacel Corp.
Consolidated Statements of Income of Operations
(Unaudited)
Three Months Ended
March 31, 2003 March 31, 2002
---------------- ---------------
Sales $ 583 $ 205,989
Cost of Goods Sold 0 185,310
Gross Profit 583 20,679
---------------- ---------------
Operating costs and expenses:
Research and development 0 103,371
Depreciation & Amortization 1,248 3,750
Interest expense 27,556 35,295
Sales and Marketing 1,014 58,879
Financing Expenses - 3,500
General and Administrative 309,615 1,112,138
---------------- ---------------
Total operating costs and expenses 339,434 1,316,933
---------------- ---------------
Loss before extraordinary items ( including discontinued
operations and the effect of an accounting change) (338,852) (1,296,254)
Gain on write-off of extinguishment of debt
Discontinued operations (Note 3)
Loss from operations of discontinued
E-Bstore business (131,992)
Gain on disposal of E-Bstore business -
Cumulative effect of accounting change (407,049)
---------------- ---------------
Net (loss) $ (338,852) $ (1,835,295)
================ ===============
Net (loss) per common share
Basic (0.01) (63.65)
Diluted (0.01) (63.65)
================ ===============
Weighted Average shares outstanding
Basic 27,296,056 28,834
Diluted 27,296,056 28,834
================ ===============
See accompanying notes to consolidated financial statements.
F-3
PACEL CORP. AND SUBSIDIARIES
Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31, March 31,
2003 2002
------------ ------------
Cash flows from operating activities:
Net (loss) $ (338,852) $ (1,835,295)
Adjustments to reconcile net (loss) to net cash
(used in) provided by operating activities:
Cumulative effect of accounting change 407,049
Depreciation 1,248 3,750
Provision for Bad Debts 0
Other non cash items 66,332 835,500
Gain on sale of EB-Store 0
Increase (Decrease) in Cash from changes in:
Accounts receivable 0 218,741
Other receivables (29,665) 2,270
Inventory 0 4
Security deposits 0 (15,237)
Prepaid expenses 0 0
Accounts payable (53,503) 147,603
Accrued expense 24,779 112,191
Loans Payable Officers-Stockholders 50,530 19,550
Net cash (used in) operating activities (279,131) (103,874)
------------ ------------
Cash flows from financing activities:
Repayment of loans payable (10,128) (125,362)
Notes payable convertible debenture 25,000
Notes payable 0
Proceeds from sale of common stock options 492,425 150,000
------------- -------------
Net cash provided by financing activities 482,297 49,638
Effect of exchange rates on cash - (1,000)
------------- -------------
Net increase (Decrease) in cash and cash equivalents 203,166 (55,236)
Cash and cash equivalents at beginning of year 8,379 65,761
------------- -------------
Cash and cash equivalents at end of period $ 211,545 $ 10,525
============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest 2,777 2,380
------------- -------------
See accompanying notes to consolidated financial statements.
F-4
PACEL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
March 31, 2003
1. Basis of Presentation
The unaudited financial statements included in the Form 10-QSB have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation SB. The financial information furnished herein reflects all
adjustments, which in the opinion of management are necessary for a fair
presentation of the Company's financial position, the results of operations and
cash flows for the periods presented.
Certain information and footnote disclosures normally contained in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted, pursuant to such rules and regulations.
These interim statements should be read in conjunction with the audited December
31, 2002 consolidated financial statements and related notes included in the
Company's year ended certified financial statements. The results of operations
for the periods ended March 31, 2003 are not necessarily indicative of the
operating results for the year. The Company presumes that users of the interim
financial information herein have read or have access to the audited financial
statements for the preceding fiscal year and that the adequacy of additional
disclosure needed for a fair presentation may be determined in that context. The
results of operations for any interim period are not necessarily indicative of
the results for the full year.
2. Related Party Transactions
The Company purchased $30,000 of internet services from E-BStor owned by F. Kay
Calkins a director and the wife of David Calkins CEO/President. In addition we
advanced them an additional $30,000 for work not completed. The Company has a
receivable of $46,164 which consist of a receivable for rent and the advanced
payament.
3. Subsequent events
a. On March 17, 2003, the Company effected a one-for-thirty reverse split
restating the number of common shares as of December 31, 2002 from
635,537,735 to 21,184,591. All references to average number of shares
outstanding and prices per share have been restated retroactively to
reflect the split.
b. In January and March 2003, in connection with our acquisition of MRG
California LLC, we issued a total of 49,385,707 unrestricted shares of
our Common Stock, No Par Value per share, to The Honor Hedge Fund,
LLC., a Nevada limited liability company; Reisco consulting, Inc. a
Nevada Corporation; Equities First, LLC a Delaware Limited Liability
Company; and MRG California LLC. In addition the Company issued
120,000,000 shares of unrestricted stock to David and F. Kay Calkins
in exchange for $600,000 of debts owed to them. However, because they
are "Affiliates" of Pacel, Mr. And Mrs. Calkins will be able to
re-sell their shares only in compliance with Rules 144 and
F-5
145. These shares were issued pursuant to Section 3 (a) (10) of the
Securities Act of 1933, as amended, after a hearing with notice to,
and an opportunity to be heard from, interested parties, as to the
fairness of each transaction, by courts in Nevada and Illinois who
specifically determined, prior to declaring that the transactions were
exempt under Section 3 (a) (10), that the transactions were fair to
the interested parties. All shares have been adjusted for the 30 to 1
reverse.
c. In April 2003, the Company acquired 100% 2,940 shares of the
outstanding stock of Benecorp Business Services Inc. to be accounted
for as a purchase. The Company will assume approximately $1,000,000 of
debt in connection with this purchase. As consideration the Company
will pay $300,000 in cash to and issued 200,000 shares of Section 144
restricted Pacel common stock. The Company made a deposit of $96,000
in 2002. In connection with the purchase we signed two one year
employment contracts with the officers for $75,000 each.
d. In April 2003, the Company purchased up to $100,000,000 of customer
contracts from MRG California LLC for 3 times annualized net profit
margin on each contract in either cash or free trading stock. We have
issued 34,500,000 shares of the Company's free trading stock. In
connection with the purchase of the contracts we have signed a one
year servicing agreement with MRG to services these contracts until
RSG becomes registered as a PEO in the state of California.
e. In April 2003, the Company acquired 100% of the stock of Asmara to be
accounted for as a purchase. The Company agreed to acquire all of the
debts up to $2,000,000. In connection with this purchase the Company
signed a two year employment contract with an officer of Asmara for
$150,000. In addition he may be granted options to purchase up to
1,500,000 shares of the Company's common stock for .03 per share.
These options will be issued upon the Company reaching certain goals.
f. The Securities and Exchange Commission ("SEC") filed an action in
federal district court asserting various violations of securities laws
against us. The complaint alleges that defendant Frank Custable
"orchestrated" a "scheme" to illegally obtain stock from various
companies, including the Company , through "scam Commission Form S-8
registration statements, forged stock authorization form and at least
one bogus attorney opinion letter arranged by Custable." The complaint
alleges that , in connection with this alleged "scheme," the Company
and its CEO, David Calkins violated Section 17(a) of the Securities
Act and Section 10(b) and Rule 10b-5 of the Exchange Act. The SEC asks
that the Company and Calkins be permanently enjoined from future
violations, ordered to pay disgorgement and civil penalties and
Calkins be barred from continued service as an office and director. As
part of an ex parte proceeding, the District Court has ordered the
Company and Calkins to provide an accounting of their assets and the
transactions that are the subject of the complaint. The Company has
not yet been served with the complaint, and no further proceedings are
scheduled at this time.
F-6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL BUSINESS
Management's discussion and analysis of results of operations and financial
condition, include a discussion of liquidity and capital resources. The
following discussion (presented in hundreds, except per share amounts) should be
read in conjunction with the consolidated financial statements and notes
thereto.
In 2002, Pacel completed an evaluation of its business model and the potential
success in its existing business initiatives. It was determined that the Company
should, as part of that review, evaluate other potential business markets that
could provide the potential for success. In September 2002, Pacel announced its
intention to enter the Professional Employer Organization ("PEO") industry. In
addition, the Company plans to provide Administrative Service Organization
("ASO") services. The Company will provide human capital management solutions to
small business clients within the United States. Subsequent to March 31, 2003,
the Company successfully completed the acquisition of two PEO organizations and
one ASO organization and is evaluating additional opportunities with the
potential for organic growth in order to secure its position as an industry
leader. The Company sees this initiative in these industries as an opportunity
to tap into the lucrative small business market in the United States and intends
to compliment its activities with information technology services, business
consulting and financial services at a future time.
Through its PEO/ASO business unit, the Company will market to its clients,
typically small to medium-sized businesses with between five and one hundred
employees, a broad range of products and services that provide an outsourced
solution for the clients' human resources ("HR") needs. The Company's products
and services will initially include benefits administration, payroll
administration, governmental compliance, risk management, unemployment
administration, and health, welfare and retirement benefits. The Company is
currently working to establish the necessary national vendor relationships in
order to effectively and competitively provide such services to a broad range of
clients.
Three Months ended March 31, 2003 compared to the Three Months ended March 31,
2002
Sales for the three months ended March 31, 2003 decreased to $583 compared to
sales of $205,989 for the three months ended March 31, 2002. The Company's
revenue in 2003 was predominantly derived from the sale of retail software
products. We were not actively selling our products due to resources being
devoted to the development of our PEO business.
Cost of Goods sold decreased to $-0- in the three months ended March 31, 2003
compared to $185,310 in the corresponding three months ended March 31, 2002. The
decrease in the cost of goods sold was directly related to the decrease in
sales.
8
Research & Development expenses decreased to $-0- in the three months ended
March 31, 2003 as compared to $103,371 in the comparable three months ended
March 31, 2002. The decrease in research and development expenses during the
first three months of 2003 reflects the elimination of in the development staff
for new software products.
General & Administrative expenses decreased to $309,615 in the three months
ended March 31, 2003, compared to $1,112,138 in the three months ended March 31,
2002. The Company has significantly reduced its operating requirements. Until we
finished the planned acquisitions only we have let all nonessential
administrative staff go. We have moved to a new facility reducing our rent by
66%.
Depreciation expenses decreased to $1,248 in the three months ended March 31,
2003, compared to $3,750 in the three months ended March 31, 2002.
Interest Expense is interest paid and accrued on the Convertible Notes, Notes
payable and the interest due for the loan from a stockholder. Interest amounted
to $27,556 in the three months ended March 31, 2003 compared to $35,295 in the
three months ended March 31, 2002.
Finance Expense in the first three months ended March 31, 2003 was $-0- compared
to $3,500 in the three months ended March 31, 2002.
LIQUIDITY AND CAPITAL RESOURCES:
Cash and cash equivalents increased to $211,545 for the three months ended March
31, 2003 from $10,523 at March 31, 2002. Net cash used for operating activities
was $279,131 during the three month ended March 31, 2003 compared to $103,874 in
the corresponding three months ended March 31, 2002. Cash used in operating
activities was derived from the net loss increases in other receivables, and a
decrease in accounts payable off set by an increase in accrued expenses and
officers loans.
Net cash provided by financing activities in the three months ended March 31,
2003 amounted to $482,297 compared to $49,638 in the corresponding three months
ended March 31, 2002. This was directly related to the issuance of common stock
relating to the two lines of credit that we sign.
In September 2002, we entered in an Equity line of credit for $10,000,000 from
the Honor Hedge Fund and Reisco Hedge Fund through High Desert Capital at a
variable discount rate of 12.5% to 50%. We can draw up to $500,000 per month.
The line will is being used for the acquisition of BeneCorp., other acquisitions
and working capital. We drew down $465,000 to date and issued 8,885,707 shares
of common stock.
In March 2003, we entered into an Equity line of credit for $10,000,000 from
Equities First Inc. at a discount rate of up to 50%. We can draw up to $500,000
per month. The line was being used for the acquisition customer contracts from
MRG California, LLC., other acquisitions and working capital. We drew down
$172,200 and issued 6,000,000 shares of common stock.
9
In April 2003 we signed an agreement with MRG to purchase up to $100,000,000 of
customer contracts at a cost of 3times the annualized net profit margin. We
believe that development of this business in conjunction with the acquisitions
of other PEO companies will provide us with a direct marketing channel for our
IT consulting, System Security, hardware and Web based technologies.
In October 2002, we signed an agreement to purchase 100% of the assets of
BeneCorp. Business Services Inc. a human resource support company, for $720,000
to be paid over the next six months in equal monthly payments of $180,000.
$96,000 was transferred to BeneCorp in 2002. However, due to delays in funding
in the implementation of the Section 3(a)(10) reorganization we were unable to
make the payments as scheduled. Due to these delays the acquisition contract was
renegotiated as a stock purchase, the final closing was in April, 2003. We will
assume approximately $1,000,000 in debt. In connection with the BeneCorp
acquisition we signed two, employment agreements with the officers of BeneCorp.
for $75,000 per year each. We believe that this acquisition will help expand the
TRSG business. We have filed an 8K, an amended filing is being prepared to
include the audited financial statements are being prepared along with the
pro-forma financial states
In April 2003, the Company acquired 100% of the stock of Asmara to be accounted
for as a purchase. The Company agreed to acquire all of the debts up to
$2,000,000. In connection with this purchase the Company signed a two year
employment contract with an officer of Asmara for $150,000. In addition he may
be granted options to purchase up to 1,500,000 shares of the Companies common
stock for .03 per share. These options will be issued upon the Company reaching
certain goals.
The Company purchased $30,000 of internet services from E-BStor owned by F. Kay
Calkins a director and the wife of David Calkins CEO/President. In addition we
advanced them an additional $30,000 for work not completed. The Company has a
receivable of $46,164 which consist of a receivable for rent and the advanced
payament.
We have filed an 8K for the acquisition of BeneCorp and Asmara, an amended
filing is being prepared to include the audited financial statements along with
the pro-forma financial statements.
Our cash requirements for funding our operations continue to greatly exceeded
cash flows from operations. We continue to satisfy our capital needs through
equity financing and short-term loans for from David and F. Kay Calkins Officer
and shareholder, until we can turn our cash flow around. Our liabilities consist
of over extended accounts payable, payroll taxes, loans from officers and
accrued officer's compensation and interest expense.
Currently we have focused our efforts on developing strategic relationships with
other organizations associated with the PEO business. The loss of equity
financing would seriously hinder our ability to continue as a going concern.
We expect to continue our investing activities, including expenditures for PEO
acquisitions, including sales and marketing, product support, and administrative
support, as funds become available.
Forward Looking Statements
The Company is making this statement in order to satisfy the "safe harbor"
provisions contained in the Private Securities Litigation Reform Act of 1995.
10
This Form 10-QSB includes forward-looking statements relating to the business of
Pacel. Forward-looking statements contained herein or in other statements made
by Pacel are made based on management's expectations and beliefs concerning
future events impacting Pacel and are subject to uncertainties and factors
relating to the Company's operations and business environment, all of which are
difficult to predict and many of which are beyond the control of the Company,
that could cause actual results of the Company to differ materially from those
matters expressed in or implied by forward-looking statements. The Company
believes that the following factors, among others, could affect its future
performance and cause actual results of the Company to differ materially from
those expressed in or implied by forward-looking statements made by or on behalf
of the Company: (a) the effect of technological changes; (b) increases in or
unexpected losses; (c) increased competition; (d) fluctuations in the costs to
operate the business; (e) uninsurable risks; and (f) general economic
conditions.
Item 3. CONTROLS AND PROCEDURES.
As of March 31, 2003, an evaluation was performed under the supervision and with
the participation of the Company's management, including the Principal Executive
Officer and the Principal Accounting Officer, of the effectiveness of the design
and operation of the Company's disclosure controls and procedures. Based on that
evaluation, the Company's management, including the Principal Executive Officer
and the Principal Accounting Officer, concluded that the Company's disclosure
controls and procedures were effective as of March 31, 2003. There have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect internal controls subsequent to March 31, 2003.
PART II. OTHER INFORMATION
ITEM 3. LEGAL PROCEEDINGS
The Securities and Exchange Commission ("SEC") filed an action in federal
district court asserting various violations of securities laws against us. The
complaint alleges that defendant Frank Custable "orchestrated" a "scheme" to
illegally obtain stock from various companies, including the Company , through
"scam Commission Form S-8 registration statements, forged stock authorization
form and at least one bogus attorney opinion letter arranged by Custable." The
complaint alleges that , in connection with this alleged "scheme," the Company
and its CEO, David Calkins violated Section 17(a) of the Securities Act and
Section 10(b) and Rule 10b-5 of the Exchange Act. The SEC asks that the Company
and Calkins be permanently enjoined from future violations, ordered to pay
disgorgement and civil penalties and Calkins be barred from continued service as
an office and director. As part of an ex parte proceeding, the District Court
has ordered the Company and Calkins to provide an accounting of their assets and
the transactions that are the subject of the complaint. The Company has not yet
been served with the complaint, and no further proceedings are scheduled at this
time.
11
We are a defendant in various lawsuits, with vendors from whom we owe monies. We
have hired a firm to try and settle our delinquent account payable. These claims
are recorded as liabilities.
Item 2. Changes in Securities
On March 17, 2003, the Company effected a one -for-thirty reverse split
restating the number of common shares a of December 31, 2002 from 635,537,735 to
21,184,591. All references to average number of shares outstanding and prices
per share have been restated retroactively to reflect the split.
Option Grants
None
Issuances of Stock for Services or in Satisfaction of Obligations
We issued 1,666,666 shares of No Par Value common stock for various consulting
and Legal fees.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
Acquisitions
In April 2003, the Company acquired 100% 2,940 shares of the outstanding stock
of Benecorp Business Services Inc. to be accounted for as a purchase. The
Company will assume approximately $1,000,000 of debt in connection with this
purchase. As consideration the Company will pay $300,000 in cash to and issued
200,000 shares of Section 144 restricted Pacel common stock. The Company made a
deposit of $96,000 in 2002. In connection with the purchase we signed two one
year employment contracts with the officers for $75,000 each.
In April 2003, the Company purchased up to $100,000,000 of customer contracts
from MRG California LLC for 3 times annualized net profit margin on each
contract in either cash or free trading stock. We have issued 34,500,000 shares
of the Company's free trading stock. In connection with the purchase of the
contracts we have signed a one year servicing agreement with MRG to services
these contracts until RSG becomes registered as a PEO in the state of
California.
12
In April 2003, the Company acquired 100% of the stock of Asmara to be accounted
for as a purchase. The Company agreed to acquire all of the debts up to
$2,000,000. In connection with this purchase the Company signed a two year
employment contract with an officer of Asmara for $150,000. In addition he may
be granted options to purchase up to 1,500,000 shares of the Companies common
stock for .03 per share. These options will be issued upon the Company reaching
certain goals.
Item 6. Exhibits and Reports
None.
13
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, registrant has duly caused this report to be signed in its behalf
by the undersigned thereunto duly authorized.
Pacel Corporation
BY: /s/ David Calkins
-------------------------------
David Calkins, CEO/CFO
DATED: May 20, 2003
14
CERTIFICATION
I, David Calkins, CEO and CFO, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Pacel
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's Board of Directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
May 20, 2003
/s/David Calkins
------------------------------------
David Calkins, CEO and CFO
15